PILLAR: Livable
AGENDA DATE: November 10, 2026
COUNCIL DISTRICT(S): Citywide
DEPARTMENT: Department of Sanitation Services
PRIORITY: N/A
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SUBJECT
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Authorize a third amendment to the Materials Recovery Facility Develop, Operate, and Manage Contract, as amended, with FCC Environmental Services Texas, LLC and Fomento de Construcciones y Contratas, S.A. dba FCC, S.A. to temporarily modify revenue sharing, host fees, and recycling education contributions for an initial three year period with two one-year renewal options, while continuing recycling processing services at McCommas Bluff Landfill without a City processing payment - Estimated Revenue Foregone: Sanitation Operation Fund approximately $3,000,000.00 (over a three-year term)
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BACKGROUND
On September 9, 2015, the City Council authorized the development, construction, operation, and management of a materials recovery facility and a concurrent ground lease with Fomento de Construcciones y Contratas, S.A. dba FCC, S.A. (“FCC Spain”), by Resolution No. 15-1650. Operations began January 2, 2017.
On April 10, 2019, the City Council authorized the first amendment by Resolution No. 19-0503, temporarily adjusting certain host fees and extending the primary contract term through January 1, 2035, subject to applicable extensions. The second amendment, effective August 28, 2020, approved assignment of the contract to FCC Environmental Services Texas, LLC (“FCC Texas”), while retaining FCC Spain’s continuing liability for contract obligations.
FCC Texas has requested concessions because weak commodity markets and rising processing costs have resulted in continuing financial impacts. Following staff review and an independent consultant’s validation of relevant documentation, staff recommends approval.
The proposed amendment would:
• Establish an initial three-year adjustment period, with two additional one-year periods available by mutual written agreement based on continued market conditions.
• Apply market-based revenue-sharing percentages and host-fee rates, retain the annual host-fee payment guarantee on 28,000 tons of non-City material, and waive host fees on tonnage above that amount while the adjustments apply.
• Replace the annual per-household education payment with a payment of $1 per inbound ton of City material while retaining FCC’s $65,000.00 annual direct education expense commitment, plus staff time.
• Automatically suspend or reinstate the temporary adjustments based on specified commodity-market conditions and minimum stability periods.
• Preserve the underlying contract term, operational requirements, reporting obligations, and FCC Spain’s continuing liability.
The amendment is expected to reduce Sanitation revenue by approximately $1 million annually under continued unfavorable market conditions. Actual revenue foregone will depend on commodity values, material volumes, and any suspension of the adjustments. The potential reduction was incorporated into Sanitation’s FY 2026-27 adopted budget and FY 2027-28 planned budget without a resulting increase to residential rates during those years.
This action authorizes a third amendment to the City’s contract for recycling processing at McCommas Bluff Landfill. The amendment would temporarily reduce payments to the City in response to unfavorable recycling markets and increased operating costs while preserving processing services without a City payment.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On September 9, 2015, the City Council authorized a fifteen-year contract with conditional extension options from one to ten years for the development, construction, operation and management of a materials recovery facility to process single-stream recycling material at the McCommas Bluff Landfill and a concurrent ground lease agreement for a fifteen-year lease term with conditional extension options from one to ten years with Fomento de Construcciones y Contratas, S.A. dba FCC, S.A. for approximately 15 acres of land located at 5100 Youngblood Road within the McCommas Bluff Landfill by Resolution No. 15-1650.
On April 10, 2019, the City Council authorized Supplemental Agreement No. 1 with Fomento de Construcciones y Contratas, S.A. dba FCC, S.A. to temporarily modify certain host fees for non-City recyclable materials, preserve annual guaranteed host-fee tonnage, and extend the primary contract term through January 1, 2035, subject to applicable extension options, by Resolution No. 19-0503.
The Parks, Trails, & Environment Committee was briefed by memorandum regarding this matter on November 2, 2026. <https://cityofdallas.legistar.com/View.ashx?M=F&ID=16100104&GUID=D9B1139C-DC60-46A7-A4C0-DD3E294CA20F>
FISCAL INFORMATION
Estimated Revenue Foregone: Sanitation Operation Fund $3,000,000.00 (over a three-year term)
OWNERS/EXECUTIVES
FCC Environmental Services Texas, LLC
Dan Brazil, Chief Executive Officer
Fomento de Construcciones y Contratas, S.A. dba FCC, S.A.
Pablo Colio, Chief Executive Officer